Funds to put some “skin in the game”
Even if it is small, you should have a vested interest in the property that you want to buy. This means, to make your offer attractive to a seller, you will need to have funds for a good faith deposit. Also known as earnest money, this deposit can be as little as $500, and is a gesture that shows a seller you are a serious buyer. This deposit is applied towards your purchase price at the time of closing.
You may also be required to pay for your home inspections or a portion of your closing costs. Each buying situation is different and you should be prepared to have some funds saved for expenses that come up during the buying process.
Plan for routine home maintenance
Owning a home means there is no longer a landlord to call when something in the home breaks. In order for homes to remain in good condition, they need routine upkeep and maintenance. Maintenance can be anything from yard work or fixing appliances to general repairs. If something breaks when you own your home, you as the owner are the responsible party.
Before you buy a home, take a look at your finances and make sure that you can comfortably budget for home maintenance. A good rule of thumb is to save 1 percent of your home’s price annually in anticipation for home maintenance.
Is a move in the near future?
Homeownership is a long-term investment. If you move often due to your job, or you are planning a move soon; you might consider your situation before making a commitment to buy a home. You will incur expenses when you buy a home, such as closing costs, fees for inspections, funding your escrow account, and moving expenses. When you sell a home, expect to pay 6 to 10 percent of the sales price to pay your listing agent and in closing costs. This means if you as a buyer become a seller 2 to 3 years later, you may not have built enough equity in your home to make a profit. In fact, you might risk losing money on your sale.
Homeownership is a fantastic way for individuals to build long-term wealth and establish roots in the community they call home. Homeownership takes discipline and financial responsibility. Before investing in a home consider your lifestyle, finances and if you are mentally prepared for the responsibilities that come with owning a home.
Remember, just because you are not ready today, does not mean you will never be ready. Your perfect home will be there for you when you are ready.
Kellie Tinnin is the Career Development Director for ERA Sellers & Buyers Real Estate and a real estate blogger in Albuquerque, NM. Kellie is an advocate for raising the bar in the real estate industry, often writing about how real estate agents can improve their service to the public. Visit her at: www.kellietinnin.com